MAY     8 


Shipping's  Share  in  Foreign  Trade 

Fundamentals  of  Ocean  Transportation 


i       °F 


Guaranty  Trust  Company 
of  New  York 


Shipping's  Share  in  Foreign  Trade 

Fundamentals  of  Ocean  Transportation 


Shipping's  Share  in  Foreign  Trade 

Fundamentals  of  Ocean  Transportation 


•T* 

u    Guaranty  Trust  Company  of  New  York 

•  i  . 

140  Broadway 

FIFTH  AVENUE  OFFICE  L  O  N  D  O  N    O  F  FI  C  E  S 

Fifth  Avenue  and  43rd    Street  32T  Lombard    Street,    E.   C. 

5  Lower  Grosvenor  PI.,  S.W. 

MADISON  AVENUE  OFFICE  PARIS          OFFICE 

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COPYRIGHT,  1919 

BY  GUARANTY  TRUST  COMPANY 

OF  NEW  YORK 


Illustrations 

PAGE 

Frontispiece  6 

More  than  twenty  new  cargo  carriers  being  equipped 
with  engines  at  a  shipyard  in  Newark  Bay  8 

Products  of  fields,  factories,  and  mines  reaching  the 
port  of  New  York  for  distribution  to  the  four  corners 
of  the  earth  10 

The  constant  stream  of  traffic  along  the  waterfront  of 
New  York  11 

Huge  floats,  propelled  by  tugs,  transporting  freight 
cars  loaded  with  goods  for  foreign  markets  to  ter- 
minal warehouses  in  New  York  City  12 

Giant  cranes  swinging  freight  aboard  a  trans-atlantic 
liner  13 

Loading  cargo  for  countries  south  of  the  Equator  14 

Training  Recruits  to  man  our  New  Merchant  Marine  16-17 

A  freighter,  shepherded  by  puffing  tugs,  proceeding  to 
her  dock  at  New  York  18 

Loading  cotton  for  export  at  one  of  our  southern  ports    20 

American  cotton  on  lighters  in  the  harbor  of  Barcelona, 
Spain  21 

Along  the  docks  at  Liverpool  22 

The  picturesque  port  of  Havre,  France  23 

The  busy  harbor  of  Genoa  24 

The  port  of  Buenos  Aires  26 

The  harbor  of  Valparaiso,  Chile  27 

Shanghai,  overlooking  the  Soochow  River  29 
American  goods  en  route  to  their  destination  in  China     30 


Before  the  Civil  War 
America  led  the  mari- 
time nations  of  the 
world.  American  clip- 
per ships  outsailed  all 
others. 


Photograph  by  Edwin  Levick 


Today,  for  the  first  time  in  more  than  half  a  century,  the  United  States  is  in  sight 
of  the  long-desired  goal  of  transportation — American  products  in  American  owned 
and  operated  vessels. 


Shipping's  Share  in  Foreign  Trade 

Fundamentals  of  Ocean  Transportation 


THE  necessity  for  the  expansion  of  our 
foreign  trade  is  as  vital  as  any  con- 
fronting American  industry  today.  In- 
creased productive  capacity  created  by 
the  war  for  war's  needs  cannot  be  elimi- 
nated with  the  coming  of  peace  without  the 
gravest  consequences  to  the  commercial, 
financial,  and  economic  welfare  of  the  en- 
tire nation.  The  machinery  assembled  to 
meet  the  demands  of  war  cannot  and 
should  not  be  wholly  dismantled,  but 
must,  in  large  part,  be  turned  into  new  and 
permanent  channels  of  production.  Capi- 
tal cannot  scrap  its  investments,  nor  labor 
its  new-found  scale  of  employment.  The 
country  cannot  consume  all  it  produces  on 
the  present  basis  of  output,  and  an  outlet 
must  be  found  for  the  surplus.  Commer- 
cial salvation  lies  in  greater  foreign  trade 
through  the  development  of  new  markets 
and  the  expansion  of  o.ld  ones. 

SHIPPING 

Transportation  is  the  link  between  the 
producer  and  the  consumer — the  means  of 
1) ringing  the  goods  to  the  ultimate  buyer. 
More  than  ninety  per  cent,  of  the  exports 
and  imports  of  the  United  States  are  car- 
ried by  wrater.  America's  future  prosper- 
ity, therefore,  lies  largely  on  the  seas. 
Shipping  is  the  prime  factor  of  interna- 
tional trade,  and  that  nation  is  best 
equipped  for  such  trade  that  has  the  best 
ocean-carrying  facilities.  For  the  first 
time  in  more  than  half  a  century  the 
United  States  is  in  sight  of  the  long-desired 
goal  of  transportation  for  the  bulk  of 
American  products  in  American  owned 
and  operated  vessels. 

Before  the  Civil  War  America  led  the 


maritime  nations  of  the  world.  American 
clipper  ships  outsailed  all  others.  Amer- 
ican shipyards  stood  first  in  quantity  and 
quality  of  output.  American  tonnage  was 
the  greatest  in  volume. 

Before  the  present  war,  however,  ship- 
ping conditions  were  very  different. 
Ninety  per  cent,  of  the  foreign  trade  of  the 
United  States  was  then  transported  in  for- 
eign vessels.  American  sea-going  tonnage 
represented  barely  two  per  cent,  of  the 
world's  total.  American  shipyards  were 
turning  out  about  one  ship  to  Great  Brit- 
ain's six,  and  producing  only  about  one- 
tenth  of  the  world's  output.  Seven- 
eighths  of  the  registered  American  ship- 
ping was  engaged  in  lake,  river,  and  coast- 
wise trade.  Transfer  of  tonnage  from 
American  to  foreign  registry  was  increas- 
ing steadily. 

OUR  PRESENT  POSITION 

Today  this  position  is  almost  completely 
reversed.  The  ocean-going  tonnage  of  this 
country  is  more  than  five  times  the  pre- 
war total,  and  about  equal  to  the  former 
combined  lake,  river,  and  coastwise  ship- 
ping. American  shipyards  are  producing 
twice  as  many  vessels  as  Great  Britain, 
and  as  many  as  the  United  Kingdom  and 
all  other  countries  combined.  The  Amer- 
ican tonnage  total  is  within  striking  dis- 
tance of  England's,  and  is  far  greater  than 
that  of  any  other  nation.  About  forty  per 
cent,  of  the  exports  and  imports  of  the 
United  States  is  being  carried  in  American 
vessels.  Nearly  half  a  billion  dollars  of 
American  private  capital  has  been  in- 
vested in  American  shipping  and  ship- 
building enterprises  since  the  beginning 

[7 


Photo  by  courtesy  of  The  Rudder 

More  than  twenty  new  cargo  carriers  being  equipped  with  engines 
at  a  shipyard  in  Newark  Bay 


of  the  war.  Billions  have  been  expended 
by  the  Government  in  the  creation  of  a 
great  merchant  navy,  and  it  is  planned  to 
spend  billions  more.  A  huge  organization 
has  been  built  up  which  represents  hun- 
dreds of  shipways,  thousands  of  ships, 
hundreds  of  thousands  of  workers,  and 
millions  of  dollars  in  pay-rolls. 

TONNAGE  TERMS  DEFINED 
The  use  of  different  kinds  of  tons  in  the 
official  statements  of  ship  destruction  and 
production  made  by  the  various  Govern- 
ments has  led  to  much  misunderstanding 
regarding  the  actual  tonnage  holdings  of 
the  different  countries.  The  statements 
of  the  United  States  Shipping  Board  are 
made  in  deadweight  tons,  but  the  United 
States  Bureau  of  Commerce  and  Naviga- 
tion, the  British  Admiralty,  and  other  or- 
ganizations use  gross  tons.  In  some  other 
countries  the  net  ton  is  used  as  the  stand- 
ard. An  understanding  of  the  difference 

8] 


in  the  various  kinds  of  tonnage  used  in 
shipping  statistics  is  necessary  in  order  to 
make  an  intelligent  comparison  of  the 
maritime  situation. 

Gross  tonnage  represents  the  entire  cub- 
ical capacity  of  a  vessel,  in  units  of  100 
cubic  feet,  including  space  occupied  by 
cabins,  engines,  boilers,  and  coal  bunkers. 

Net  tonnage  expresses  in  units  of  100 
cubic  feet  the  vessel's  carrying  capacity, 
the  space  occupied  by  cabins,  machinery, 
etc.,  being  deducted. 

Deadweight  tonnage  represents  the 
maximum  weight  of  cargo,  bunkers,  con- 
sumable stores,  and  all  weight,  including 
passengers  and  crew. 

Measurement  tonnage  is  used  to  ex- 
press the  space  cargo  takes  up  rather  than 
its  weight.  The  unit  in  this  case  is  forty 
cubic  feet. 

Displacement  tonnage  is  used  in  the 
case  of  warships  to  denote  the  actual 
amount  of  water  displaced  by  the  vessel. 


For  conversion  purposes,  in  dealing 
with  groups  of  tonnage,  roughly,  gross 
tonnage  is  two-thirds  of  deadweight,  and 
net  two-thirds  of  gross.  For  instance, 
300,000  deadweight  tons  are  the  equiva- 
lent of  200,000  gross  tons.  Gross  tonnage 
is  most  used  for  commercial  purposes  and 
will  be  employed  here,  unless  otherwise 
stated. 

GREAT  INCREASE  IN  OUR  SHIPPING 

How  America's  shipping  has  gained 
during  the  war  and  subsequently,  while 
that  of  other  nations  has  decreased  is 
shown  by  the  contrast  between  sinkings 
and  seizures  and  new  building.  The  fol- 
lowing table  (in  gross  tons)  covers  the 
world,  the  Central  Powers  excepted: 

United  United          Other 

States  Kingdom  Countries  World 

At  outbreak  of  War    7,900,000  19,250,000  15,250,000  42,400,000 

.   .   .       900,000  9,000,000  5,100,000  15,000,000 


Gross  reduction  to.  7,000,000  10,250,000  10,150,000  27,400,000 
Added  by  building.  3,400,000  4,800,000  2,500,000  10,700,000 
Added  by  seizures  .  500,000  700,000  1,175,000  2,375,000 

Tonnage  November 

11,  1918  ....  10,900,000    15,750,000    13,825,000    40,475,000 
Added  to  April  1, 

1919    (net    esti- 

....       900,000        675,000        550,000      2,125,000 


Tonnage,   April  1, 

1919     ....    11,800,000    16,425,000    14,375,000    42,600,000 
Gain  or  loss    .   .   .  t3,900,000    -2,825,000       -875,000      t200,000 

With  the  war  losses  of  ships  practically 
restored  the  world  over  (the  net  deficiency 
of  the  Central  Powers  is  estimated  at 
about  2,500,000  tons)  there  remains  to  be 
supplied,  as  already  indicated,  the  normal 
increase  that  would  have  occurred  had  not 
the  war  intervened.  This  in  the  pre-war 
period  was  at  the  rate  of  slightly  more 
than  2,000,000  tons  annually,  so  that  the 
total  deficiency  to  the  beginning  of  1919 
was  about  ten  million  tons. 

Of  America's  estimated  total  of  nearly 
twelve  million  tons  up  to  April  1,  1919, 
more  than  half  is  sea-going.  In  fact, 


Edward  N.  Hurley,  Chairman  of  the 
United  States  Shipping  Board,  estimates 
our  ocean-carrying  tonnage  at  nearly  six 
and  one  half  million  tons. 

GROWTH  OF  FOREIGN  TRADE 

The  growth  of  the  American  merchant 
marine  has  been  attended  by  a  remark- 
able increase  in  the  foreign  trade  of  the 
country.  From  a  total  of  about  four  and  a 
quarter  billion  dollars  for  the  year  ended 
June  30,  1914,  the  aggregate  of  the  coun- 
try's foreign  trade  has  now  grown  to  more 
than  nine  billion  dollars  annually,  and 
the  excess  of  exports  over  imports  from 
half  a  billion  dollars  yearly  to  more  than 
three  billions. 

All  the  ports  of  the  country  have  shared 
in  the  expansion  of  trade.  How  greatly 
they  have  shared  in  it  is  indicated  by  the 
following  table,  showing  the  value  of  the 
combined  exports  and  imports  at  the  sev- 
en leading  ports  for  1913,  as  compared 
with  1917: 

1913  1917 

New  York  .  .  .  $1,904,926,000  $4,391,319,000 
New  Orleans  .  283,822,000  408,027,000 
Galveston  .  .  .  268,012,000  274,784,000 
Boston  and 

Charlestown  .  216,152,000  443,483,000 
Philadelphia  .  .  161,665,000  573,957,000 
Baltimore  .  .  .  149,369,000  418,006,000 
San  Francisco  .  130,486,000  286,917,000 

DETERMINATION  OF  FREIGHT  RATES 

To  the  shipper  the  question  of  freight 
rates  is  a  vital  one  in  normal  times.  Under 
the  abnormal  conditions  of  the  war-per- 
iod, delivery,  not  cost,  was  the  first  neces- 
sity to  be  considered,  and  as  a  result  of 
this,  coupled  with  the  conversion  of  much 
merchant  tonnage  to  war  service,  and  the 
consequent  scarcity  of  cargo  space,  rates 
rose  to  record  heights  until  regulated  by 
Government  action.  Cotton,  for  instance, 
crossed  the  Atlantic  at  a  carrying  cost  of 

[9 


Photograph  by  K.l« 

Products  of  fields,  factories,  and  mines  reaching  the  port  of  New  York  for  distribution 
to  the  four  corners  of  the  earth 


seventeen  cents  per  pound,  occupying  less 
room  and  paying  more  for  its  passage  in 
proportion  than  a  steerage  passenger  did 
before  the  war.  Fortunes  are  reported  to 
have  been  made  in  some  cases  out  of  the 
single  voyage  of  a  vessel. 

An  English  estimate  of  the  operation  of 
twenty  million  gross  tons  of  British  ship- 
ping in  1916  places  the  gross  earnings  at 
considerably  more  than  a  billion  and 
three-quarters  dollars.  A  summary  of  the 
returns  indicates  the  effect  of  Government 
regulation  upon  rates : 

Average 
.  per  Gross 

ton  earnings 

11, 000,000  tons  at  "Blue 
•    Book    Rates"     (fixed 

by  the  Government)  .    $45  $495,000,000 

4,000,000     tons,     partly 
under  directed  rates; 
i.e.  care  of  sugar, wheat, 
meat,  iron  ore,  etc  .    .    110.00 
5,000,000  tons  free;  i.e., 


at  current  market  rates    1 80 . 00 


440,000,000 
900,000,000 


20,000,000  tons 
10] 


$98.75  $1,835,000,000 


Many  factors  enter  into  the  determina- 
tion of  rates  beyond  the  question  as  to 
whether  the  supply  of  tonnage  is  greater  or 
less  than  the  volume  of  demand.  The  im- 
portance of  this  condition  as  an  influence 
on  rates  is  indicated  by  the  fact  that  ex- 
perts estimate  that  so  small  a  variation 
as  two  and  one-half  per  cent,  in  the 
amount  of  tonnage  necessary  for  the 
world's  needs  at  a  given  time  will  result  in 
a  rise  or  a  slump  in  freight,  accordingly  as 
the  demand  exceeds  the  supply,  or  the  re- 
verse. In  terms  of  shipping,  however, 
a  two  and  one-half  per  cent,  variation  in 
the  world's  merchant  fleets  means  more 
than  a  million  gross  tons,  the  equivalent  of 
hundreds  of  vessels. 

In  determining  ocean  freight-rates  the 
chief  basic  items  of  consideration  include 
the  interest  on  the  cost  of  the  ship,  depre- 
ciation of  ship,  insurance  charges,  operat- 
ing expenses — coal,  supplies,  wages,  and 
maintenance  of  crew,  etc. — port  charges, 
tonnage  dues,  and  labor. 


While  agreements  between  ocean  lines 
tend  to  regulate  competition  and  to  play 
an  important  part  in  the  fixing  of  rates, 
there  is  small  probability  of  a  point  being 
reached  where  anything  resembling  an 
actual  monopoly  in  ocean-carrying  can  be 
effected.  The  character  of  charter-traffic, 
in  distinction  from  line-traffic,  is  an  im- 
portant element  in  the  situation.  Compe- 
tition is  unrestricted  in  charter- traffic, 
except  in  a  few  regions  of  lesser  impor- 
tance, and  the  great  volume  of  this  tonnage 
available  must  always  act  as  an  offset  to 
the  operation  of  line-traffic  on  a  more  or 
less  non-competitive  basis.  Despite  many 
kinds  of  conference  arrangements,  compe- 
tition between  "  tramp"  vessels  and 
between  "tramps"  and  the  regular 
lines  continues  unabated.  And  competi- 
tion between  rival  ports  and  rival  coun- 
tries is  also  to  be  reckoned  with.  The  lim- 
it^ number  of  ocean  lines  makes  the  es- 


tablishment of  working  agreements  com- 
paratively easy,  a  condition  that  does  not 
apply  in  the  case  of  the  thousands  'upon 
thousands  of  "tramps"  operating  inde- 
pendently. 

There  have,  at  various  times,  been 
agreements  between  groups  of  owners  of 
"tramp"  vessels,  but  these  have  not  been 
of  sufficient  scope  to  have  any  material 
effect  upon  the  general  situation. 

In  the  case  of  the  ocean  lines,  however, 
agreements,  conferences,  and  pools  have 
been  successfully  established  and  con- 
ducted to  the  end  of  substituting  cooper- 
ative regulation  for  unrestricted  competi- 
tion. Practically  all  the  leading  lines  ply- 
ing to  and  from  American  ports  operate 
under  agreements  of  various  kinds.  Be- 
fore the  war  the  German  companies  fig- 
ured prominently  in  these  arrangements. 

Conferences  constitute  the  organiza- 
tions through  which  the  ocean  lines  con- 


Photograph  by  Edwin  Levick,  K.  Y. 

The  constant  stream  of  traffic  along  the  water-front  of  New  York 


in 


Photograph  by  Edwin  Levick,  N.  Y. 

Huge  floats  propelled  by  tugs,  transporting  to  terminal  warehouses  in  New  York  City, 
freight  cars  loaded  with  goods  for  foreign  markets 


duct  their  pools,  understandings,  or  agree- 
ments. While  the  proceedings  are  largely 
informal  in  some  instances  and  mainly  of 
a  consultatory  character,  in  others  elabor- 
ate organizations  are  effected,  with  boards 
of  officers,  stated  and  special  meetings, 
rules  of  procedure,  and  provisions  for  pen- 
alties. In  some  cases  officials  of  the  con- 
ference are  empowered  to  fix  freight  rates, 
commissions,  and  rebates  applicable  to  all 
members,  and  to  have  access  to  the  books 
of  any  or  all  of  the  lines.  Boards  of  arbi- 
trators are  in  some  instances  authorized  to 
settle  any  disputes  among  members. 

COOPERATION  IN  SHIPPING 

Through  pooling  arrangements  many 
ocean  lines  take  steps  to  strengthen  the 
cooperative  system.  Traffic  pools  and 
money  pools  are  conducted  for  the  pur- 
pose of  assuring  each  member  of  a  fair 
share  of  freight  and  passenger  business, 
and  an  allotment  of  traffic  may  be  pro- 
vided for.  Some  agreements  go  to  the 
point  of  lumping  the  net  receipts  and  di- 
viding them  on  an  agreed  proportional 
basis. 

The  "deferred  rebate"  system  was 
made  illegal,  so  far  as  the  United  States  is 
concerned,  by  the  Shipping  Act  of  Sep- 
tember, 1916.  This  system,  used  as  a  pro- 
tection against  the  competition  of  non- 
12] 


conference  lines,  offered  to  shippers  at  the 
end  of  a  specified  period,  a  rebate  of  from 
five  to  ten  per  cent,  of  their  payments  for 
freight,  on  the  stipulation  that  in  the  in- 
tervening period  they  had  given  their  en- 
tire trade  to  the  conference  lines. 

Complaints  against  the  monopolistic 
powers  of  the  ocean  lines  operating  under 
agreement  have  been  made  at  times. 
Dominance  over  rates,  slowness  in  settling 
claims,  indifference  in  handling  freight, 
refusal  at  times  to  publish  classifications 
and  rates,  and  the  granting  of  special  rates 
to  favored  shippers,  are  some  of  the  mat- 
ters that  have  been  brought  to  issue.  The 
Shipping  Act  of  September,  1916,  how- 
ever, has  prohibited  many  of  the  features 
complained  of.  In  addition,  the  United 
States  Shipping  Board  has  supervisory 
powers  over  the  entire  administration  of 
ocean  conferences. 

Many  advantages  are  claimed  to  have 
resulted  from  the  conferences.  Among 
them  is  the  improved  service  effected.  The 
cost  of  operation,  it  is  contended,  is  re- 
duced, with  the  result  that  while  the  net 
earnings  of  the  lines  are  increased,  the 
shipper  receives  lower  rates  and  greater 
efficiency  of  service.  Stabilization  of  rates 
is  another  instance  of  the  merits  claimed 
as  due  to  the  cooperative  working  of  the 
lines. 


Any  marked  general  reduction  in  rates 
may  be  said  automatically  to  stimulate 
shipments.  A  high  level  usually  results 
in  the  holding  back  of  large  quantities  of 
freight  on  which  urgent  delivery  is  not  re- 
quired, and  a  sharp  cut  in  rates  is  the 
signal  for  pushing  forward  this  class  of 
goods  so  that  it  can  be  laid  down  overseas 
at  a  satisfactory  total  cost. 

Charter-rates  fluctuate  much  more  free- 
ly than  line-rates  because  of  the  much 
greater  competitive  element  entering  into 
the  operation  of  "tramp"  tonnage.  There 
have  been  numerous  instances,  in  fact, 
where  charter-rates  have  changed  many 
times  in  the  course  of  a  single  day. 

MEANING  OF  COMMERCIAL  TERMS 

The  following  commercial  terms  are 
most  commonly  used  in  connection  with 
the  shipments  of  goods  to  other  countries : 

C.  F.,  or  C.  and  F.  (Cost  and  Freight).  The 
goods  are  furnished  and  the  freight  paid— but  no 
other  expenses — to  place  of  delivery,  as  agreed, 
by  the  seller.  The  buyer  assumes  all  risks  while 
the  goods  are  in  transit. 

C.I.F.  (Cost,  Insurance,  and  Freight).  The 
goods  are  furnished  by  the  seller,  who  pays  the 
freight  and  insurance  to  the  point  of  delivery. 
All  other  risks  while  the  goods  are  in  transit  are 
assumed  by  the  buyer. 

F.O.B.  Destination 
(Free  on  Board).  All 
costs  are  paid  and  all 
risks  assumed  by  the 
seller  until  the  goods 
reach  the  place  of  de- 
livery as  agreed. 

F.A.S.  Steamer  (Free 
Alongside).  Goods  are 
to  be  delivered  by  the 
seller  alongside  steamer 
on  lighter,  or  on  the  re- 
ceiving pier  of  a  steam- 
ship company,  in  proper 
condition.  The  buyer 
assumes  all  subsequent 
risks  and  expenses. 


Giant  cranes  swinging  freight  aboard  a 
transatlantic  liner 


i  ne  cargo  ion,  weigiit  or  measurement, 
was  formerly  the  basis  of  ocean  line  freight 
rates;  but  the  system  is  no  longer  univer- 
sal. Quotations  on  rates  may  be  for  the 
long  ton  (2,240  Ibs.),  metric  ton  (2,204.62 
Ibs.),  the  short  ton  (2,000  Ibs.),  or  the 
measurement  ton  (40  cubic  feet) ;  but  spe- 
cial commodity  rates  are  growing  in  use. 
These  may  be  based  on  cubic  feet,  cubic 
meters,  100  pounds,  bushels,  barrels,  or 
other  specified  quantities.  (40  cubic  feet 
=  2,240  Ibs;  one  cubic  meter- 1,000  kilos). 
In  case  a  rate  is  quoted  "per  ton,  weight  or 
measurement,  ship's  option,"  the  line  re- 
serves the  right  to  charge  on  a  weight  basis 
if  the  weight  of  the  shipment  is  in  excess  of 
its  cubic  measurement,  or  on  a  measure- 
ment basis  if  the  cubic  measurement  is  in 
excess  of  the  weight.  Frequent  changes  are 
made  by  lines  from  weight  to  measure- 
ment basis,  and  vice  versa,  this  being  done 
in  many  cases  to  equalize  rates  with  those 
charged  by  other  companies. 

In  computing  the  measurement  of  pack- 
ages, the  shipper  should  bear  in  mind  that 
the  steamship  companies  in  most  instances 
measure  in  a  rectangular  way.  The  cause 
of  this  is  that  it  is  not  easy  to  stow  irregu- 
lar shaped  packages  compactly,  because 
of  the  difficulty  of  finding  packages  that 
will  fit  the  vacant  spaces.  It  then  be- 
comes necessary,  in 
order  to  prevent 
shifting  of  cargo,  to 
utilize  dunnage,  or 
timber,  for  the  un- 
filled spaces. 

One  condition 
which  operates  in 
favor  of  those  who 
ship  goods  abroad 
through  the  port  of 
New  York,  although 
largely  curtailed 
during  the  war 
period,  is  the  free 

113 


Photograph 


Loading  cargo  for  countries  south  of  the  Equator 


lighterage  privilege  extended  to  export 
freight  in  carload  lots.  By  taking  care  to 
bill  to  New  York  "lighterage  free,"  ship- 
pers avoid  the  payment  of  cartage  charges 
from  railroad  to  steamship  pier,  and  ferri- 
age as  well  if  the  transfer  has  to  be  made 
from  New  York  to  New  Jersey,  or  from 
New  Jersey  to  New  York. 

FREE  LIGHTERAGE  PRIVILEGE 
The  "free  lighterage"  regulations  at  the 
port  of  New  York  are  as  follows: 

"On  carload  eastbound  'Lighterage  Free' 
freight  (except  lumber)  three  free  export  lighter- 
age deliveries  or  one  free  domestic  lighterage 
delivery  will  be  made  from  any  one  car;  any 
additional  lighterage  deliveries  from  the  same 
car  will  be  subject  to  a  charge  of  three  cents  per 
100  pounds  with  a  minimum  of  $6  for  each 
lighterage  delivery,  except  that  any  remainder 
of  freight  from  the  same  car  may  be  delivered 
in  one  lot,  at  one  time,  at  any  one  regular  station 
of  the  railroad  company  within  the  "free  light- 
erage" limits,  subject  to  a  charge  of  SI. 

[14 


"When  more  than  one  lighterage  delivery  from 
any  one  car  of  lumber  is  made,  the  charge  for 
each  lighterage  delivery,  after  one  free  delivery, 
shall  be  three  cents  per  100  pounds  with  a  mini- 
mum of  $6  in  addition  to  the  freight  charges. 

"The  free  lighterage  limits  extend  from  the 
Battery  to  135th  Street  on  the  North  River  (New 
York  side),  from  Bergen  Point,  Shooters  Island, 
or  Clifton  to  Fort  Lee  (on  the  New  Jersey  side) ; 
on  the  East  River  from  the  Battery  to  Jerome 
Avenue  Bridge  (New  York  side),  and  from 
Astoria  to  69th  Street,  Bay  Ridge  (on  the 
Brooklyn  side.)  This  territory  takes  in  all  the 
usual  piers  at  which  steamers  load  or  discharge." 

Certain  commodities  are  excepted  from 
the  "free  lighterage"  privilege,  such  as 
bulk  freight,  or  those  of  an  unusually 
bulky  or  heavy  character. 

Freight  rates  given  by  the  steamship 
companies  are  for  packages  of  not  more 
than  two  tons  in  weight,  except  in  cases 
where  special  arrangement  has  been  made. 
If  the  weight  limit  is  exceeded  the  shipper 
must  arrange  to  have  a  hoisting  company 


load  the  goods  or  pay  hoisting  charges  to 
the  steamship  company. 

THREE  CLASSES  OF  TRANSPORTATION 

Transportation  service  for  ocean  freight 
falls  into  three  chief  classifications : 

1.  "Tramp"  or  chartered. — This  is  given  by 
vessels  equipped  to  carry  rough  and  bulky  cargo 
to  any  destination,   unless  prevented  by  legal 
requirements     or     insufficient     port     facilities. 
"Tramps"  may  be  chartered  for  single  trips  or 
stated  periods,  and  are  sometimes  placed  "on 
the  berth,"  for  whatever  cargo  may  offer.    They 
have  a  wide  range  of  activity,  being  tied  to  no 
fixed  routes.    They  are  constructed  with  a  view 
to   economy  and   cargo   capacity,   and  not  for 
speed.   Compared  with  the  regular  line  service, 
they  have  the  advantage  of  no  overhead  expense 
caused  by  the  maintenance  of  permanent  offices 
and  dock  facilities,   and  they  also  benefit  by 
securing  their  cargoes  chiefly  through  ship  brok- 
ers, thus  avoiding  the  cost  of  operating  an  elabor- 
ate  freight    soliciting   organization.    Their    dis- 
advantages lie  in  the  fact  that  they  do  not  carry 
the  better  paying  high-class  cargo  that  the  regular 
lines  can  handle  in  broken  lots  and  which  calls 
for  speedy  carriage.   Nor  have  they  the  money- 
making  opportunities  offered  by  the  carrying  of 
mails,  passengers,  and  express  goods.   Their  pa- 
tronage is  also  more  irregular  than  that  of  the 
other  classes  of  cargo-carriers. 

2.  Regular  lines, — These  give  a  fixed  service 
to  established  points  on  schedule.   Some  carry 
freight  only,  others  passengers  as  well,  and  still 
others  passengers  only.    The  freight-carriers  are 
sometimes   placed  "on  the  berth"  at  low  rates 
to  obtain  part  cargoes,  in  order  to  avoid  carrying 
ballast,  from  which,  of  course,  no  profit  is  derived. 
They  are  also  in  a  position  to  compete  with  the 
"tramps"  for  the  carriage  of  bulky  goods.   They 
are  usually  larger,  speedier,  and  better  equipped 
than  the  "tramps,"  and,  unlike  the  latter,  prac- 
tically all  are  fitted  with  engines,  whereas,  many 
"tramps"  are  dependent  on  their  sailing  power 
only. 

3.  Privately  operated  ships. — These  are  oper- 
ated chiefly  to  carry  goods  for  the  business  con- 
cerns which  run  them;  but  to  fill  out  cargo  or 
obtain   a  return   consignment,   they  frequently 
take  freight  for  other  concerns.   They  include 
many  specialized  types  of  ships,  such  as  colliers, 
fruiters,  and  tankers. 


Through  freight-forwarders  informa- 
tion may  be  obtained  as  to  ocean  freight 
rates,  and  the  sailing  dates  of  vessels;  ar- 
rangements can  be  made  for  storage  of 
freight  after  arrival;  steamer  bookings 
effected;  deliveries  of  goods  made;  insur- 
ance can  be  secured;  and  shipments 
cleared  through  the  Custom  Houses.  In 
many  cases,  freight-forwarders  have  con- 
nections at  other  American  ports  and  in 
foreign  cities.  By  this  means  they  can  ar- 
range for  shipments  with  a  view  to  the 
most  economical  and  quickest  route. 

OCEAN  ROUTES 

While  ocean  routes  are  too  numerous  to 
permit  anything  like  a  detailed  presen- 
tation in  this  booklet,  the  chief  ones  may 
be  said  to  fall  into  a  few  divisions,  which 
may  be  classified  roughly,  as  follows : 

(A)  From  the  north-eastern  ports  of  the  United 
States  to  the  British  Channel. — This  route  con- 
nects  the    leading   commercial    nations   of   the 
globe,  and  over  it  passes  not  far  from  twenty  per 
cent,  of  the  total  tonnage  of  the  world.   Skirting 
the  United  States  seaboard  to  the  Newfoundland 
Banks,    it    then    curves    across    the    Atlantic. 
Branching  off  at  various  points  of  this  route, 
other   lines   touch    ports   of    Europe    from    the 
Mediterranean  to  the  Baltic,  and  ports  of  America 
from  the  Caribbean  Sea  to  Canada. 

(B)  From  the  eastern  seaboard  of  the   United 
States,  and  from  southern  and  western  Europe, 
through  the  Mediterranean  and  the  Suez  Canal 
to  China,  Japan,  and  the  East  Indies. 

(C)  The  South  African  route — connecting  At- 
lantic ports  of  America  and  Europe  with  the 
.southern,  eastern,  and  western  coasts  of  Africa, 
and  with  New  Zealand  and  Australia.    Sailing 
vessels  also  use  this  route  for  connections  with 
the  Orient  and  the  East  Indies,  their  inability  to 
navigate  the  Red  Sea  barring  the  Suez  Canal 
route  to  them. 

(D)  The  South  American  route,  from  North 
Atlantic    to    South  American,    east    and  west 
coast,  ports. 

(E)  The  route  around  South  America,  connect- 
ing American  and  European  Atlantic  ports  with 
the  Pacific  coast  of  the  Americas. 

(Continued  on  page  16) 

115 


Training  Recruits  to  Mar 


Respect  for  the  flag  is  inculcated  early 
in  the  recruit's  career 


Apprentices  receiving  their  uniforms 


Photographs  by  courtesy  of  The  Rudder 

Manning  the  life-boats  is  one  of  the  most  essential  features  of  the  training  of  recruits 


New  Merchant  Marine 


"All-together" 
Apprentices  working  like  veterans 


Scraping  deck  on  a  U.  S.  Shipping  Board  recruiting  service  training  ship 


Photograph  by  Edwin  Levick,  N.  Y. 

A  freighter,  shepherded  by  puffing  tugst  proceeding  to  her  dock  at  New  York 


(F)  The  Gulf  and  Caribbean  route,  affording 
access  to  the  ports  of  the  United  States  Gulf 
Coast,  Mexico,  Central  America,  the  north  coast 
of  South  America,  and  the  West  Indies. 

(G)  The  Pacific  route,  connecting  North  Am- 
erica with  Asia,  over  which  an  extensive  trade 
with  China,  Japan,  and  the  Philippines  is  carried 
on. 

(H)  From  the  North  American  Pacific  coast  to 
New  Zealand,  Australia,  and  the  South  Sea 
islands. 

(I)  The  Panama  Canal  route,  the  development 
of  the  use  of  which  promises  to  be  rapid  and 
extensive  with  the  relief  from  the  abnormal  con- 
ditions created  by  the  war.  European  trade  with 
the  west  coast  of  North  and  South  America,  and 
America's  Atlantic  and  Gulf  trade  with  the 
Pacific  coast  and  the  Orient,  can  be  expected  to 
move  to  an  increasing  degree  by  way  of  Panama. 

PROBLEM    OF    PROFITABLE    VOYAGES 

These  are  the  principal  ocean-carrying 
trade-routes;  but  they  are  only  a  few  of 
the  highways  followed  by  the  merchant 

18] 


fleets  of  the  world.  The  ramifications  are 
almost  endless;  they  shift  as  the  trade 
demands  of  the  foreign  markets  increase 
or  lessen. 

To  find  freight  that  will  make  each  voy- 
age profitable  is  the  constant  problem  of 
the  ship  operator.  Idle  ships  in  port  are 
costly,  and  costly,  too,  is  the  ship  which 
is  unable  to  obtain  a  cargo  and  is  forced 
to  make  a  return  voyage  in  ballast,  using 
fuel,  supplies,  and  labor  for  which  there 
will  be  no  return  in  earnings.  To  obviate 
this,  triangular  voyages  are  made.  With 
"tramp"  vessels  this  practice  is  common, 
but  it  is  carried  out  even  by  steamship  lines 
operating  over  established  routes.  As  an 
instance  of  the  lengths  to  which  it  is  some- 
times necessary  to  go  to  operate  at  a  profit, 
a  steel  corporation,  in  order  to  put  its 
service  from  New  York  to  Vancouver  on 
a  paying  basis,  was  obliged  to  sail  its  ves- 


sels  from  Vancouver  to  France  before  re- 
turning to  New  York.  Four  complete 
changes  of  cargo  were  required,  the  itin- 
erary being : 

From  New  York  to  Vancouver,  with  steel; 

Vancouver  to  the  Gulf  of  California,  with  coal 
or  lumber; 

Gulf  of  California  to  Dunkirk,  France,  with 
copper  matte; 

Dunkirk  to  New  York,  with  French  chalk. 

SHIPPER'S  PAPERS 

Agreement  having  been  reached  in  re- 
gard to  the  ocean  freight-rate  on  the  goods 
to  be  transported,  the  employment  of  a 
series  of  commercial  documents  becomes 
necessary.  These  may  be  styled  Ship- 
per's Papers.  They  constitute  the  record 
of  the  dealings  between  the  carrier  and  the 
shipper,  between  the  shipper  and  the  Gov- 
ernment authorities,  the  consignees,  and 
insurance  concerns.  A  second  series  of 
documents  used  in  connection  with  for- 
eign trade  may  be  entitled  Ship's  Papers. 
These  represent  the  dealings  of  the  carrier 
with  the  Government,  and  in  the  opera- 
tion of  its  vessels. 

Export  and  Import  Licenses. — Although  trie 
greut  majority  of  restrictions  on  goods  shipped 
to,  and  received  from,  other  countries  have  been 
removed,  the  Government  still  requires  the  filing 
of  license  applications  with  the  War  Trade  Board. 
Exports  were  first  placed  under  regulations,  so  ,a 
after  America's  entry  into  the  war,  the  object 
being:  (1)  to  prevent  materials  from  re.achir"- 
the  enemy  either  directly  or  indirectly  (iyto 
conserve  a  sufficient  supply  of  commoM"  >s  . ,, 
meet  domestic  needs;  and  (3)  to  insure  a  reserve 
from  which  to  fill  the  requirements  of  our  Allies. 
Imports  were  made  subject  to  restriction  in  thev 
fall  of  1917.  The  method  of  regulation  adopted 
has  been  an  important  factor  in  the  conservation 
of  cargo  space. 

Shipping  Permit. — A  form  giving  permission 
to  the  shipper  or  his  agent  to  deliver  the  goods 
for  shipment  at  the  carrier's  wharf  on  a  specified 
date. 

Dock  Receipt. — Upon  delivery  of  the  goods  a 
receipt  is  issued  by  the  receiving  clerk  at  the 
wharf.  In  it  are  recorded  the  name  of  the  vessel 


on  which  the  shipment  is  to  be  made,  the  destina- 
tion and  consignee,  and  the  distinguishing  marks, 
weights,  and  measurements  of  the  various  pack- 
ages. 

Shipper's  Manifest  (or  export  declaration). — 
The  next  step  is  the  clearance  of  the  goods  at 
the  Custom  House.  It  is  required  by  the  Gov- 
ernment that  the  shipper,  or  his  agent,  file  a 
manifest  giving  in  detail  the  goods  to  be  export- 
ed. The  manifest  must  be  sworn  to,  as  it  is  from 
this  source  that  the  Government  prepares  its 
statistics  of  exports.  The  Collector  of  Customs 
retains  the  original  and  a  duplicate  is  turned 
over  to  the  carrier. 

Consular  Invoice. — This  document  is  required 
when  exports  are  consigned  to  Central  and 
South  American  countries,  Cuba,  Mexico,  and 
Portugal.  The  various  countries  have  different 
forms  which  may  be  obtained  and  sworn  to  at 
the  consulates,  fees  being  charged  for  certifica- 
tion. The  number  of  copies  required  varies 
from  one  to  seven,  the  various  countries'  regula- 
tions in  this  respect  differing.  Particulars  must 
be  given  of  the  shipment  and  its  value,  shipping 
charges,  etc. 

Certificate  of  Origin. — By  a  number  of  foreign 
countries,  among  which  are  Argentina,  France 
(in  the  case  of  most  goods).  Italy,  Japan,  Nic- 
aragua, Paraguay,  Spain,  Turkey,  and  Uruguay, 
a  certificate  is  required  stating  that  the  goods 
to  be  exported  are  products  or  manufactures  of 
the  United  States.  Where  countries  have  two 
tariff  schedules,  this  certificate  is  necessary  to 
secure  the  minimum  duties.  Various  fees  are 
charged  in  connection  with  the  execution,  of 
certificates  of  origin. 

Non-Dumping  Certificate. — Some  of  the  British 
Colonies — Canada,  South  Africa,  Australia,  and 
New  Zealand — require  a  certification  by  the 
sb.ipper  that  there  is  no  difference  between  his 
export  prices  and  discounts  and  those  granted 
'  on  the  same  goods  in  the  United  States  domestic 
markets;  or,  he  can  give  a  list  of  his  domestic 
and  export  prices  and  discounts.  By  these  means 
the  Colonies  seek  to  prevent  the  flooding  of  their 
markets  with  foreign  goods  at  sharply  cut  prices, 
or  prices  below  the  cost  of  output. 

Exporter's  Invoice. — This  is  a  detailed  private 
invoice  prepared  by  the  shipper  when  the  goods 
are  ready  for  shipment.  It  describes  the  wares 
shipped  by  quantity,  weight,  measurement,  and 
price,  as  well  as  giving  the  name  of  the  vessel 
concerned,  the  destination  of  the  goods  and  the 
distinguishing  markings  on  the  packages.  It  also 

[19 


Loading  cotton  for  export  at  one  of  our  southern  ports 


bears  the  signature  of  an  official  of  the  shipping 
concern.  A  number  of  copies  are  made  of  the 
invoice.  If  a  bill  of  exchange,  or  documentary 
draft,  is  negotiated  by  the  shipper,  the  bank  will 
require  two  copies  to  be  attached  to  the  bill  of 
lading.  The  foreign  consignee  should  receive  a 
copy,  which  he  will  use  in  clearing  the  goods 
through  the  customs  on  their  arrival  abroad.  The 
shipper  will  need  one  copy  for  his  files,  and,  if 
shipping  to  the  seaboard  from  an  inland  point, 
he  will  require  another  for  the  use  of  his  agent  at 
the  port  of  shipment. 

Statement  of  Charges. — This  is  a  document  used 
on  occasion,  as  supplementary  to  the  exporter's 
invoice.  In  it  may  be  listed  separately  the 
charges  on  rail  and  ocean  freight,  insurance,  port 
services,  etc. 

Memorandum  Note. — A  list  sometimes  pre- 
pared for  the  benefit  of  the  consignee,  showing 
what  is  contained  in  each  package,  in  contrast 
with  the  exporter's  invoice,  which  indicates  the 
package  in  which  each  article  is  contained. 

Ocean  Bill  of  Lading. — The  most  important  of 
the  shipper's  papers.  It  is  customarily  drawn  up 
by  the  shipper  on  forms  which  the  carrier  supplies, 
and  which  are  signed  by  the  latter  after  he  has 
gotten  the  dock  receipt  and  the  shipper's  mani- 
fest. Besides  being  the  final  receipt  from  the 
carrier,  the  ocean  bill  of  lading  constitutes  a 
shipping  contract  between  the  carrier  and  shipper. 
It  becomes  a  negotiable  document  and  may  be 
used  by  the  shipper  as  the  basis  for  a  draft  if  it 
is  drawn  to  his  order.  It  is  not  the  usual  practice 
however,  for  the  ocean  bill  of  lading  to  be  drawn 
in  the  consignee's  name,  unless  he  has  a  special 

20] 


agreement  with  the  shipper,  or  unless  advance 
payment  has  been  made  or  security  arranged 
before  shipment.  The  basis  of  financial  settle- 
ment most  commonly  employed  in  foreign  trade 
is  by  drafts,  or  bills  of  exchange,  to  which  have 
been  attached  a  shipper's  invoice,  insurance 
policy,  and  ocean  bill  of  lading.  A  number  of 
copies  of  the  bill  are  required,  varying  according 
to  the  nature  of  the  transaction.  The  banks,  if 
settlement  is  to  be  made  by  draft,  will  require 
two  or  more  negotiable  copies  and  the  possession 
of  all  the  negotiable  copies.  Non-negotiable 
copies  will  also  be  needed  by  the  shipper,  the 
carrier,  and  the  consignee  for  filing,  and  by  foreign 
consuls  to  meet  the  provisions  of  law. 

Export  Bill  of  Lading. — This  is  used  in  cases 
where  the  exporter  at  an  inland  point  wishes  to 
bill  his  goods  from  point  of  shipment  to  foreign 
point  of  receipt,  port  or  interior.  By  obtaining  a 
through  bill  of  lading  from  a  railroad  he  obviates 
the  necessity  of  securing  a  railway  bill  of  lading 
to  the  export  port  and  then  an  ocean  bill  of 
lading  to  the  foreign  port  of  receipt.  The  export 
bill  of  lading  constitutes  a  triple  contract,  cover- 
ing: (1) — Shipment  by  rail  or  water  to  port  of 
export;  (2) — Shipment  by  sea:  (3) — Shipment 
from  foreign  port  of  entry  to  inland  destination. 

Parcel  Receipt. — Issued  by  ocean  carriers  to 
expedite  transportion  of  small  packages,  most 
commonly  samples,  although  general  merchan- 
dise is  so  shipped  on  occasions.  The  value, 
weight,  and  dimensions  of  the  goods  carried  are 
restricted.  Parcel  shipments  are  designed  to 
avoid  the  high  rates  that  would  have  to  be  paid 
for  small  lots  of  goods  under  the  minimum  freight 


charge  usually  stipulated  in  ocean  bills  of  lading, 
and  under  which  nothing  less  than  a  ton  rate 
or  a  specified  amount  would  be  accepted,  no 
matter  how  small  the  consignment.  Numerous 
shipping  lines  are  now  using  these  receipts. 

Charter  Party. — An  agreement  between  the 
charterer  and  the  vessel  owner,  or  his  agent, 
used  when  shipments  are  made  in  chartered 
vessels,  or  "tramps."  There  are  two  general 
kinds,  one  used  in  cases  of  a  charter  for  a  specified 
period,  the  other  where  the  charter  is  for  a  single 
trip.  Charter  parties  may  cover  many  points, 
including  capacity  of  vessel,  methods  of  discharge 
and  loading,  demurrage,  insurance,  rate  of  com- 
pensation, ship-broker's  commission  and  freight- 
brokerage,  etc.  The  owner,  where  the  charter  is 
by  trip,  operates  his  vessel  and  remains  in  posses- 
sion of  it.  The  rate  of  pay  is  fixed  on  the  amount 
of  freight  carried,  at  a  price  per  ton,  bushel, 


quarter,  100  pounds,  or  other  unit  of  cargo  value. 
Where  a  time  charter  is  taken,  the  ship  is  in  the 
charterer's  possession.  The  general  custom  is  for 
the  charterer  to  pay  an  agreed  rate  per  dead- 
weight ton.  He  also  supplies  fuel  and  pays  all 
port  expenses,  except  those  for  provisions  and 
crew.  In  the  case  of  a  time  charter  the  rate  of 
payment  may  be  based  on  the  net  register  ton- 
nage of  the  ship. 

SHIP'S  PAPERS 

The  principal  ship's  papers  used  by  ocean 
carriers  are: 

Ship's  Manifest. — A  list  of  all  consigned  cargo, 
the  destination  of  each  item,  its  quantity,  weight, 
distinguishing  marks,  and  numbers.  Before  the 
vessel  clears  or  enters  a  port  a  copy  of  the 
manifest  must  be  filed  with  the  Collector  of  the 
Port.  It  is  used  in  connection  with  the  shippers' 


Copyrighted  by  Und 


American  cotton  on  lighters  in  the  harbor  of  Barcelona,  Spain 


[21 


Photograph  by  Brown  Bros.,  N.  Y. 


Along  the  docks  at  Liverpool 


manifests  as  the  basis  of  the  Government's 
foreign  trade  statistics  and  also  as  a  check  on 
import  duties.  It  is  also  necessary  to  file  a  copy 
at  the  foreign  port  of  clearance  or  entry  and  other 
copies  are  carried  for  use  on  the  ship. 

Bill  of  Health. — This  is  issued  by  the  port 
authorities,  and  certifies  that  no  dangerous  or 
contagious  disease  in  an  epidemic  form  exists 
in  the  port  of  sailing. 

Shipping  Articles. — An  agreement  between 
captain  and  crew  as  to  the  conditions  under 
which  the  voyage  is  undertaken.  A  certified 
copy  must  be  obtained  before  the  vessel  can 
clear  for  a  foreign  port. 

Crew  List. — In  addition  to  the  shipping  articles 
a  list  of  the  crew,  giving  the  name,  description, 
birthplace,  and  residence  of  each  member,  must 
be  deposited  with  the  Collector  of  the  Port 
before  sailing  and  a  certified  copy  secured  for 
use  on  the  voyage. 

Certificate  of  Admeasurement. — Also  known  as 
Ship's  Register.  It  gives  a  list  of  measurements  of 
various  parts  of  the  vessel,  by  which  the  gross 
and  net  tonnage  of  the  ship  is  arrived  at. 

Inspection  Certificate. — Issued  by  the  Govern- 
ment Inspection  Service,  and  certifies  that  the 
regulations  concerning  officers,  crew,  and  equip- 
ment have  been  complied  with. 

Log-Book. — A  record  of  the  ship's  voyage, 
which  must  be  kept  by  the  master  while  the 
vessel  is  at  sea. 

Clearance  Certificate. — This  having  been  se- 
cured, the  vessel  is  free  to  leave  for  a  foreign  port. 


MARINE  INSURANCE 
Marine  insurance  is  not  only  a  protec- 
tion to  the  shipper  and  consignee,  but  also 
an  economic  factor  in  the  price  of  goods  by 
virtue  of  the  fact  that  it  eliminates  the 
risk  of  loss  to  the  consignor  in  case  of  non- 
delivery; and,  further,  it  is  necessary  in 
negotiating  credit  upon  the  consignment. 
In  addition  to  covering  the  loss  of  the  ship 
and  its  cargo,  marine  insurance  can  by 
agreement  include  the  freight  rates.  In 
the  case  of  freight  forwarded  by  rail  the 
shipper's  position  is  different.  Railroads 
are  liable  for  the  loss  of  freight  and  dam- 
age to  it  while  in  their  care,  except  in  ex- 
traordinary circumstances.  These  excep- 
tions include  damage,  loss,  or  unreason- 
able delay  due  to  "the  Act  of  God,  the 
public  enemy,  quarantine,  the  authority 
of  law," or  to  strikes, riots,  or  such  events; 
inherent  defects  in  freight  shipped ;  act  or 
default  of  shipper,  owner,  or  other  person 
entitled  to  make  requests  upon  carriers, 
and  a  few  other  causes.  But  for  all  ordi- 
nary risks  to  which  freight  is  exposed  in 
rail  transportation,  the  railroad  is  re- 
sponsible. 

With  ocean  carriers,  however,  the  case 
is  different.  Both  by  law  and  by  the  con- 
tract provisions  of  their  bills  of  lading  they 


have  a  greatly  limited  liability.  The  Har- 
ter  Act,  passed  by  Congress  in  1893,  fixes 
the  obligations  of  a  steamship  company  in 
the  United  States.  It  is  stated  by  this 
measure  that: 

"If  the  owner  of  any  vessel  transporting  mer- 
chandise or  property  to  or  from  any  port  in  the 
United  States  of  America  shall  exercise  due 
diligence  to  make  the  said  vessel  in  all  respects 
seaworthy  and  properly  manned,  equipped,  and 
supplied,  neither  the  vessel,  her  owner,  or  owners, 
agent,  or  charterers  shall  become  or  be  held 
responsible  for  damage  or  loss  resulting  from 
faults  or  errors  in  navigation  or  in  the  manage- 
ment of  said  vessel,  nor  shall  the  vessel,  her 
owner  or  owners,  charterers,  agent,  or  master  be 
held  liable  for  losses  arising  from  damages  of  the 
sea  or  other  navigable  waters,  acts  of  God,  or 
public  enemies,  or  the  inherent  defect,  quality,  or 
vice  of  the  thing  carried,  or  from  insufficiency  of 
package,  or  seizure  under  legal  process,  or  for 
loss  resulting  from  any  act  or  omission  of  the 
shipper  or  owner  of  the  goods,  his  agent  or  repre- 
sentative, or  from  saving  or  attempting  to  save, 
life  or  property  at  sea,  or  from  any  deviation  in 
rendering  such  service." 

The  conditions  upon  which  carriers  are 
liable  under  the  Harter  Act,  in  addition  to 


making  the  vessel  seaworthy,  properly 
manned,  provisioned,  and  outfitted,  are 
"negligence,  fauk  or  failure  in  proper 
loading,  stowage,  custody,  care  or  proper 
delivery." 

While  the  agreements  specified  in  ocean 
bills  of  lading  are  not  all  couched  in  the 
same  terms,  they  free  the  carriers  from 
liability  for  losses  due  to  the  principal  haz- 
ards of  navigation. 

By  special  arrangement  shippers  can 
have  the  insurance  apply  from  time  of  re- 
ceipt of  goods  at  the  vessel  and  hold  in 
force  until  they  have  been  discharged  at 
destination  or  received  by  the  consignee. 
By  the  ordinary  policy  the  risk  is  covered 
only  when  the  goods  are  actually  on  the 
vessel. 

If  it  is  not  specifically  so  stated  all  goods 
are  shipped  "  under  deck."  If  shipment  is 
made  "on  deck,"  the  insurance  applica- 
tion must  so  specify.  And  in  the  case  of 
freight  carried  "on  deck"  the  insurance 
is  free  of  claim  for  injury  due  to  the  ele- 
ments, except  in  case  of  total  loss. 


s 

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1. 

Photograph  by  Edwin  Levick,  N.  V, 


The  picturesque  port  of  Havre,  France 


[23 


All  damage  or  loss  of  merchandise  is  not 
covered  by  marine  insurance.  Chafing  or 
ordinary  wear  and  tear  of  cargo  practically 
certain  in  a  sea  voyage  are  not  included  in 
"perils  of  the  sea."  What  is  provided 
against  is  unusual  occurrence,  such  as 
shifting  of  cargo  caused  by  stress  of  weather, 
damage  by  sea  water,  and  such  other 
casualties  as  may  be  covered  by  agree- 
ment in  each  individual  case.  Loss  from 
theft  or  pilferage  is  covered  in  the  ordinary 
policy  and  must  be  arranged  for  especially. 

VARIOUS   FORMS   OF   INSURANCE 

Besides  underwriting  associations  such 
as  Lloyd's,  there  are  marine  insurance 
companies,  self-insurance  plans,  and  (a 
creation  of  the  war)  Government  marine 
insurance  plans.  In  the  Corporation  of 
Lloyd's,  which  has  had  headquarters  at 
London  since  the  middle  of  the  seven- 
teenth century,  there  is  represented  the 
main  center  of  marine  insurance  through- 
out the  world.  It  was  not  incorporated 
until  1871.  No  marine  underwriting  is 
undertaken  by  Lloyd's  as  an  association. 
It  is  an  exchange  in  which  a  group  of  un- 
derwriters each  conducts  business  inde- 


pendently. Shipping  news  is  also  col- 
lected by  Lloyd's. 

Many  regularly  incorporated  insurance 
companies  also  insure  marine  risks,  espe- 
cially in  this  country. 

Of  recent  years,  however,  there  has  been 
a  growing  tendency  for  steamship  com- 
panies to  conduct  self -insurance  plans.  In 
some  cases  passengers'  baggage,  property, 
and  cargoes  as  well,  are  insured  in  this 
way ;  but  the  insurance  of  vessel  property 
is  most  common.  In  Great  Britain  vessel 
owners,  to  a  large  extent,  secure  marine 
insurance  through  mutual  associations  of 
shipowners  or  clubs.  Committees  make 
assessments  in  proportion  to  the  tonnage 
insured  by  the  various  members. 

VARIOUS  KINDS  OF  LOSSES 
Protection  may  be  sought  through  ma- 
rine insurance  against  various  kinds  of 
losses  or  liabilities.  The  "total  loss"  of 
the  vessel,  its  freight,  cargo,  profits,  or 
other  insurable  interest  may  be  safe- 
guarded against.  Total  destruction  or 
damage  to  such  an  extent  that  the  prop- 
erty is  no  longer  of  any  practical  value 
to  the  insured  is  termed  an  "actual  total 


1 


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Copyrighted  by  Publishers'  Photo  Service 

24] 


The  busy  harbor  of  Genoa 


loss."  A  "constructive  total  loss*'  is  one 
in  which  the  property,  while  only  slightly 
damaged,  is  nevertheless  of  no  value 
to  its  owner.  It  may  be  necessary,  for 
instance,  to  abandon  a  ship  although  it 
has  not  been  badly  injured.  By  giving 
notice  of  abandonment  in  that  case  the  in- 
sured's  contract  enables  him  to  obtain  the 
full  amount  of  insurance  on  a  "construc- 
tive total  loss." 

A"  partial  loss  "  is  capable  of  settlement 
in  accordance  with  either  "particular  av- 
erage" or  "general  average"  rules. 

The  "general  average"  is  based  on  the 
principle  that,  in  case  of  a  deliberate  vol- 
untary sacrifice  of  a  vessel,  its  cargo,  or 
other  property  for  the  common  welfare 
and  safety,  the  whole  loss  should  not  be 
borne  by  the  owners  of  the  properties 
sacrificed,  but  should  be  divided  on  a  fair 
proportional  basis  among  all  interests  ben- 
efiting by  the  sacrifice. 

Subsequent  to  the  establishment  of  the 
act  of  voluntary  sacrifice  it  is  the  duty  of 
the  owners  of  the  vessel  to  appoint  aver- 
age adjusters,  who  draw  up  what  is  called 
a  general  average  statement.  This  lists  the 
disbursements  made  and  the  sacrifices  in- 
curred and  distributes  over  the  different 
interests  involved  (i.e., freight,  cargo,  and 
ship)  the  contribution  due  from  each  in- 
terest. 

The  principle  of  general  average  is  thus 
explained  by  William  Gow,  an  authority 
on  marine  insurance: 

"A  general  average  loss  is  a  loss  caused  by  or 
directly  consequential  on  a  general  average  act. 
It  includes  a  general  average  expenditure  as  well 
as  a  general  average  sacrifice. 

"There  is  a  general  average  act  where  any  ex- 
traordinary sacrifice  or  expenditure  is  voluntarily 
and  reasonably  made  or  incurred  in  time  of  peril 
for  the  purpose  of  preserving  the  property  im- 
perilled in  the  common  adventure. 

"When  there  is  a  general  average  loss,  the 
party  on  whom  it  falls  is  entitled,  subject  to  the 
conditions  imposed  by  maritime  law,  to  a  rate- 


able contribution  from  other  parties  interested 
and  such  a  contribution  is  called  a  general  aver- 
age contribution." 

In  settlement  on  the  basis  of  "particu- 
lar average"  the  loss  falls  wholly  on  the 
owners  of  the  property  damaged  or  its  in- 
surers. This  applies  in  cases  where  the 
damage  to  the  insured  property  has  been 
by  accident  or  not  through  destruction  in 
order  to  save  other  property. 

Payment  of  salvage,  the  legal  reward 
given  those  who  save  life  and  property  at 
sea,  is  another  cause  of  "partial  loss."  A 
vessel,  for  instance,  towing  to  port  another 
which  it  has  found  in  distress,  is  entitled 
to  claim  salvage  and  the  owner  or  insurer 
of  vessel  and  cargo  benefiting  must  pay 
the  amount  legally  due. 

TYPES  OF  POLICIES 

Types  of  marine  insurance  policies  are 
very  numerous,  among  the  principal  being 
"cargo,"  "freight,"  "vessel,"  "vessel  and 
freight,"  "blanket,"  "cotton,"  "coal," 
"war  risk,"  etc.,  the  titles  signifying  the 
property  protected.  While  most  of  the 
same  kinds  of  policies  are  akin  in  general 
form  and  principal  features,  there  is  no 
uniform  type. 

Either  "valued"  or  "open"  policies 
may  be  secured.  The  "valued"  type 
gives  the  agreed  value  of  the  property  af- 
fected. In  the  case  of  the  "open"  policy, 
no  value  is  stated  and  it  must  be  ascer- 
tained in  the  event  of  loss. 

"Floating"  and  "named"  policies  are 
also  used.  The  "floating"  policy  specifies 
value  of  property  insured,  limits  of  voyage, 
and  class  or  type  of  vessel  to  be  employed. 
No  particular  vessel  is  named,  however, 
the  procedure  being  followed  to  enable  the 
shipper  to  secure  insurance  on  his  goods 
before  he  has  learned  the  name  of  the  ves- 
sel upon  which  his  goods  will  be  shipped. 
It  also  provides  him  with  protection  in  the 
event  of  a  loss  before  he  has  made  the  in- 

[25 


The  port  of  Buenos  Aires 


surance  specific.  When  the  vessel's  iden- 
tity is  known,  the  name  is  "declared"  to 
the  underwriter  and  indorsed  on  the  pol- 
icy, which  then  becomes  a  "named"  in- 
stead of  a  "floating"  policy.  "Voyage" 
policies,  covering  a  single  trip  of  the  ves- 
sel, and  "time"  policies,  for  a  specified 
period,  are  also  employed. 

The  use  of  marine  insurance  certifi- 
cates is  frequent.  These  are  issued  against 
policies  and  do  away  with  the  need  of  issu- 
ing copies  of  the  policy  to  be  used  in  con- 
nection with  various  commercial  formali- 
ties. After  obtaining  insurance  up  to  a 
specified  total  sum,  for  instance,  an  ex- 
porter can  protect  his  bankers,  consignees, 
exchange  brokers,  or  creditors,  by  issuing 
certificates  duly  countersigned  and  serv- 
ing the  purposes  of  the  actual  policy. 

PRINCIPLE  OF  ABANDONMENT 
An  important  principle  for  the  importer 
to  understand  is  that  of  abandonment  as 
permitted  under  the  customs  regulations. 
It  frequently  happens  that  cargo  reaches 
port  in  a  condition  that  renders  it  totally 
or  practically  worthless  for  the  importer's 


purposes.  This  may  be  due  to  deteriora- 
tion during  the  voyage  (as  in  the  case  of 
perishable  goods),  to  injury,  or  to  other 
causes.  In  such  cases  the  importer  by 
taking  the  proper  steps  may  give  up  the 
goods  and  so  avoid  the  further  loss  that 
would  be  occasioned  by  payment  of  duty. 
TKe  sections  of  the  customs  regulations 
relating  to  abandonment  are  as  follows: 

"ART.  602 — Time — Quantity. — An  importer 
may  within  ten  days  after  the  date  of  entry  as  de- 
fined in  article  233  abandon  all  or  any  portion  of 
merchandise  included  in  any  invoice,  and  may 
be  relieved  from  the  payment  of  duty  on  the  por- 
tion so  abandoned,  provided  such  portion  shall 
amount  to  10  per  cent,  or  more  of  the  total  value 
or  quantity  of  the  invoice  on  which  entry  is  made. 

"The  ten  days  include  Sundays  and  holidays. 

"The  notice  of  such  abandonment  must  be 
filed  with  the  collector  in  writing. 

"ART.  603 — Delivery  and  Examination. — Mer- 
chandise to  be  abandoned  must  be  deliverable, 
and  the  importer  must  deliver  it  at  such  place 
within  the  port  of  arrival  as  the  collector  may 
direct.  If  the  importer  shall  fail  to  make  delivery 
as  directed,  the  collector  will  transfer  such  mer- 
chandise at  the  expense  of  the  importer. 

"The  collector  shall  cause  the  abandoned  mer- 
chandise to  be  examined  and  identified  with  that 
described  in  the  invoice  used  in  making  the  entry. 


"ART.  604. — The  collector  shall  sell  the  aban- 
doned merchandise  for  the  account  of  the  United 
States  and  after  paying  the  expense  of  the  sale, 
deposit  and  account  for  the  net  proceeds  under 
'Miscellaneous  receipts  from  customs.'  No 
part  of  the  proceeds  shall  be  returned  to  the  im- 
porter. If  the  merchandise  is  entirely  worthless, 
or  the  expense  of  the  sale  would  probably  exceed 
the  proceeds,  the  collector  will  immediately  de- 
stroy the  same." 

THE    "DRAW-BACK"    SYSTEM 

The  refund  of  duties  under  the  "draw- 
back" system  offers  a  means  of  large  sav- 
ing in  foreign  trade.  The  Government  al- 
lows exporters,  in  cases  where  imported 
material  is  used  in  the  manufacture  of  do- 
mestic merchandise,  a  "drawback,"  con- 
sisting of  the  import  duty  paid  on  the 
same,  less  one  per  cent.  Medicinal  and 
toilet  preparations,  including  perfumery, 
made  in  the  United  States  with  the  use  of 
domestic  tax-paid  alcohol,  are  also  subject 
to  drawback,  the  amount  being  equiva- 
lent to  the  tax  on  the  alcohol  used. 

It  is  required  as  a  prerequisite  to  the  al- 
lowance of  the  "drawback"  that  the  ma- 
terial must  pass  through  some  process  of 
manufacture,  and  a  claim  must  be  filed 
with  the  collector  of  customs  at  the  port 


of  exportation  before  the  goods  are  loaded 
on  the  vessel,  or  cross  the  border  into  Mex- 
ico or  Canada.  The  claim  must  be  com- 
pleted within  three  years  from  the  date  of 
exportation  by  filing  the  affidavits  and 
certificates  required;  otherwise,  it  will  be 
treated  as  abandoned.  Before  drawback 
can  be  claimed  application  must  be  made 
to  the  Treasury  Department  at  Washing- 
ton. 

It  is  not  necessary  that  manufacturers, 
in  order  to  take  advantage  of  the  "draw- 
back" provision,  should  have  imported 
the  material  used  by  them.  Nor  is  it  re- 
quired that  the  export  shipments  should 
be  made  in  their  name,  or  for  their  ac- 
count. 

Documents  used  in  connection  with  the 
entering  of  imports  through  the  Custom 
House  are  too  numerous  and  too  compli- 
cated to  be  detailed  here.  Several  hun- 
dred different  kinds  of  blank  forms  are 
employed.  Custom  House  brokers  or 
specialists  are  engaged  by  most  importers 
to  see  that  the  formalities  required  by  the 
Government  are  properly  complied  with. 
The  most  important  documents  needed 
are  the  ocean  bill  of  lading,  the  consular 


Copyrighted  by  E.  M.  Ne 


The  harbor  of  Valparaiso,  Chile 


invoice,  if  value  of  the  goods  imported  ex- 
ceeds $100,  or  plain  invoice  if  the  value  is 
$100  or  less. 

The  whole  subject  of  duties  and  ap- 
praisement is  likewise  too  complex  and 
voluminous  to  make  any  attempt  at  even 
a  general  description  possible  here;  but 
specific  information  on  this  subject  can 
be  obtained  through  the  Foreign  Trade 
Bureau  of  the  Guaranty  Trust  Company 
of  New  York.  One  point  that  should  be 
noted,  however,  is  that  in  case  a  consignee 
has  no  invoice  and  the  value  of  the  goods 
to  be  imported  is  less  than  $100,  he  may 
enter  his  goods  under  a  so-called  appraise- 
ment. The  United  States  appraiser  will 
then  establish  the  value  and  assess  duty 
accordingly. 

In  order  to  import  duty-free  American 
goods  that  have  been  exported  and  are 
shipped  back  to  the  United  States,  it  is 
necessary  that  a  "declaration"  should  be 
made  at  the  office  of  the  American  con- 
sulate in  the  district  from  which  the  goods 
are  shipped,  or  at  the  port  of  shipment. 
This  declaration  must  state  that  the  goods 
have  not  been  advanced  in  value,  or  im- 
proved in  condition  by  any  process  of 
manufacture,  or  other  means,  while 
abroad.  A  bond  may  be  given  for  the  pro- 
duction of  the  declaration  if  it  is  imprac- 
ticable to  produce  it  at  the  time  of  entry. 
If  the  value  of  the  merchandise  does  not 
exceed  $100  the  declaration  maybe  waived 
by  the  United  States  customs  officials. 

In  addition  to  the  declaration,  a  certi- 
ficate must  be  obtained  from  the  collector 
of  the  port  from  which  the  goods  were 
shipped  originally.  This  certificate  must 
state  that  the  goods  are  the  same  and  have 
not  been  advanced  in  value  or  altered  in 
any  Way  since  leaving  the  United  States. 
The  certificate  will  be  issued  only  when 
the  collector's  record  of  Custom  House 
clearances  shows  the  actual  exportation 
of  the  goods  in  the  first  place,  as 


claimed.  In  case  the  certificate  has  not 
been  obtained,  a  bond  may  be  given  for 
its  production  in  a  sum  equal  to  what 
the  duties  would  be  if  the  merchandise 
were  foreign. 

BANKING  FACILITIES 

Banking  institutions  hold  a  prominent 
part  in  the  development  of  foreign  trade, 
for  it  is  chiefly  through  this  medium  that 
the  financing  of  exports  and  imports  is  ef- 
fected. The  growing  use  of  acceptances  is 
an  important  factor  in  the  extension  of  in- 
ternational commerce. 

Payment  for  the  goods  purchased  may 
be  arranged  in  a  number  of  ways. 

The  purchaser  may  remit  with  the  or- 
der. He  may  open  a  bank  credit  in  favor 
of  the  seller,  or  the  seller  may  draw  a 
draft  on  the  purchaser,  or  ship  the  goods 
on  open  account  and  await  remittance. 
Other  methods  are  also  available. 

Where  remittance  is  made  with  the  or- 
der the  advantage  is  with  the  shipper.  He 
receives  payment  for  his  goods  in  advance 
and  the  purchaser  must  wait,  perhaps 
months,  before  receiving  his  order,  and 
may  have  to  hold  the  material  for  a  con- 
siderable period,  pending  sale.  On  the 
other  hand,  if  the  buyer  has  surplus  cash 
on  hand  he  is  often  in  a  position  to  secure 
the  goods  he  needs  at  special  prices. 

In  the  case  of  the  seller  shipping  on  open 
account  and  awaiting  remittance  the  bur- 
den of  the  financing  falls  upon  him,  much 
as  it  does  upon  the  buyer  when  the  latter 
remits  with  order. 

Where  the  shipper  draws  upon  the  pur- 
chaser the  procedure  is,  briefly,  as  follows : 

A  draft  payable  to  his  own  order  is 
drawn  by  the  seller  on  the  buyer.  To  this 
are  attached  the  necessary  documents  in 
connection  with  the  sale  and  shipment  of 
the  goods,  bills  of  lading,  marine  insur- 
ance policy,  invoices,  etc.  The  seller  in- 
dorses the  draft,  thus  guaranteeing  its 


Copyrighted  by  E.  M.  Newma 


Shanghai,  overlooking  the  Soochow  River 


payment,  and  it  can  be  sold  or  discounted 
in  New  York  City  through  an  agent  or 
correspondent  of  a  bank  doing  business  in 
the  locality  in  which  the  purchaser  carries 
on  his  business.  At  the  expiration  of  the 
period  specified  in  the  draft  the  purchaser 
pays  the  amount  due  and  the  transaction 
is  closed. 

The  acceptance  plan,  however,  has  a 
number  of  advantages  over  the  system 
whereby  the  seller  draws  direct  on  the 
buyer.  There  are  two  main  methods  in 
connection  with  the  use  of  acceptances  in 
trade : 

1.  Establishment  of  commercial  credits  author- 
izing the  bank  giving  them  to  accept  and  negoti- 
ate drafts  made  upon  it  by  the  seller. 

2.  Furnishing  by  the  purchaser  to  the  seller  of 
the  name  of  the  bank  abroad  upon  which  he 
may  draw. 

Domestic  bankers'  acceptances,  as  cre- 
ated by  the  first  method,  are  regarded  as 
most  desirable  paper.  The  importer's 
bank  provides  the  seller  with  reimburse- 


ment by  guaranteeing  acceptance  and 
payment  of  drafts  drawn  by  him  on  his 
bank.  The  accepting  bank  forwards  the 
documents  covering  the  merchandise  to 
the  one  opening  the  credit.  The  bills  ac- 
cepted have  a  ready  market. 

What  are  known  as  foreign  exchange 
bills  or  bankers'  bills  are  created  by  the 
second  method.  They  have  the  necessary 
bills  of  lading,  invoices,  etc.,  attached  to 
them  and  are  drawn  in  the  currency  of  the 
importing  country.  After  being  purchased 
from  the  drawer  at  current  exchange  rates 
they  are  forwarded  by  the  purchasing 
bank  for  acceptance  to  the  bank  desig- 
nated. 

A  bank  acceptance  may  be  defined  as 
an  extension  of  the  bank's  credit  to  a  cus- 
tomer, wherein  the  bank,  for  a  considera- 
tion, permits  the  customer  to  avail  himself 
of  this  privilege. 

Bank  acceptances  offer  distinct  advan- 
tages both  to  business  men  and  the  banks 
through  which  they  deal. 

[29 


Through  the  use  of  acceptances,  trust 
companies  and  banks  can  finance  business 
dealings  of  their  customers  conveniently. 

ADVANTAGES  OF  ACCEPTANCES 
Acceptances  of  well  known  financial  in- 
stitutions will  be  increasingly  sought  as 
short  term  investments  because  of  the 
ready  market  for  them.  They  furnish  an 
advantageous  opportunity  for  the  use  of 
surplus  banking  funds. 

To  those  engaging  in  foreign  trade 
marked  advantages  are  offered.  The  dif- 
ficulty experienced  by  exporters  in  giving 
credit  terms  as  favorable  as  those  given 
foreign  buyers  by  competitors  abroad 
makes  a  case  in  point.  The  foreign  com- 
merce of  the  United  States  has  been  ham- 
pered by  the  custom  of  many  American 
exporters  to  require  payment  in  cash  at 
New  York  against  documents.  Through 
the  use  of  bank  acceptances  this  may  be 
obviated.  Credit  may  be  established  by 
the  American  exporter  by  drawing  at 
sixty  or  ninety  days  on  a  New  York  ac- 
cepting trust  company  or  bank,  and  the 
acceptance  can  be  discounted  at  an  agreed 
rate. 

The  exporter  also  gains  the  advantage 
of  receiving  immediate  payment  for  his 
goods,  and  his  capital,  instead  of  being  tied 
up  in  credits,  is  released  for  new  business. 


The  difference  between  trade  accept- 
ances and  bankers'  acceptances  is  as  fol- 
lows: A  trade  acceptance  results  from  a 
transaction  between  buyer  and  seller;  a 
banker's  acceptances  from  the  granting  of 
credit  by  a  banker.  The  buyer  accepts 
the  draft  in  the  case  of  the  trade  accept- 
ance, the  bank  in  the  case  of  the  bank  ac- 
ceptance. 

The  desirability  of  drafts  drawn  on 
the  foreign  buyer  direct  is  not  of  the  same 
grade  as  that  of  bank  acceptances.  In 
order  to  secure  his  goods  the  buyer  must 
obtain  the  essential  documents  connected 
with  the  sale  and  shipment.  They  must 
therefore  be  released  to  him  when  he 
accepts  the  draft  and  the  security  is  there- 
by removed  from  the  control  of  the  holder. 
The  risk,  in  consequence,  devolves  upon 
the  names  of  the  maker  and  acceptor.  In 
the  case  of  a  foreign  acceptor  other  than  a 
bank  the  risk  is  regarded  as  too  indefinite 
to  make  the  paper  a  desirable  purchase. 

The  bank  acceptance  is  made  a  security 
of  the  highest  class  by  the  standing  and 
credit  of  the  accepting  bank.  As  the  re- 
sponsibility lies  first  with  the  accepting 
bank  there  is  no  necessity  for  close  inves- 
tigation of  the  drawers  or  indorsers.  The 
other  parties  to  the  transaction  are  sec- 
ondary if  the  bank's  credit  is  satisfactory. 


Copyrighted  by  K.  M.  New 


American  goods  en  route  to  their  destination  in  China 


30] 


Index 


PAGE 

Abandonment,  Principle  of  26-27 

Customs  regulations  Art.  602 — Time 
— Quantity,  Art.  603 — Delivery  and 
Examination,  (26),  Art.  604  (27). 

Acceptances,  Advantages  of  30 

Banking  Facilities  28-30 

Commercial  Terms,  Meaning  of        13-14 
C.  F.,  or  C  and  F.  (Cost  and  Freight), 
C.  I.  F.  (Cost,  Insurance,  and  Freight), 
F.O.B.  Destination  (Free  on  Board), 
F.A.S.  Steamer  (Free  Alongside). 

The  "Draw-Back"  System  27-28 

Foreign  Trade,  Growth  of  9 

Free  Lighterage  Privilege  14-15 
Freight  Rates,  Determination  of         9-12 

Insurance,  Marine  22-24 

Insurance,  Various  Forms  of  24 

Losses,  Various  Kinds  of  24-25 

Ocean  Routes  15-18 

(A)  From  the  north-eastern  ports  of 
the  United  States  to  the  British 
Channel, 

(B)  From  the  eastern  seaboard  of  the 
United  States, 

(C)  The  South  African  route, 

(D)  The  South  American  route, 

(E)  The  route  around  South  America, 
(15) 

(F)  The  Gulf  and  Caribbean  route, 

(G)  The  Pacific  route, 

(H)  From  the  North  American  Pacific, 
(I)    The  Panama  Canal  Route,  (18) 


Our  Present  Position 
Policies,  Types  of 


PAGE 

7-8 
25-26 


Profitable  Voyages,  Problems  of        18-19 

Shipper's  papers  19-21 

Export  and  Import  Licenses,  Shipping 
Permit,  Dock  Receipt,  Shipper's  Man- 
ifest (or  export  declaration),  Consular 
Invoice,  Certificate  of  Origin,  Non- 
Dumping  Certificate,  Exporter's  In- 
voice (19),  Statement  of  Charges, 
Memorandum  Note,  Ocean  Bill  of 
Lading,  Export  Bill  of  Lading,  Parcel 
Receipt  (20),  Charter  Party  (21). 

Shipping  7 

Shipping,  Cooperation  in  12-13 

Shipping,  Great  Increase  in  our  9 

Ship's  Papers  21-22 

Ship's  Manifest  (21),  Bill  of  Health. 
Shipping  Articles,  Crew  List,  Certifi- 
cate of  Admeasurement,  Inspection 
Certificate,  Log-Book,  Clearance  Cer- 
tificate (22). 

Tonnage  Terms  Defined  8-9 

Transportation,  Three  classes  of  15 

(1)  "Tramp"  or  chartered,  (2)  Regular 
lines,  (3)  Privately  operated  ships. 


OVERDUE. 


Stockton,  Calif 

MT.  IAN   71    1908 


YD  05959 


.'S 


n  E 

G 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


